Secured Credit Discharge?

[Duneuser]

I hope someone may be able to answer my question. Filed Chp. 7 four years ago and had a secured credit line (dirt bikes). The account was discharged in the 7 with no mention a resolution on the collateral. (bikes)

We continued to pay the payment on our own until I contacted the creditor and asked why we stopped receiving statements. I was advised by the company that they were not allowed to continue sending statement due to the 7. I then received advice that we we no longer obligated to continue paying on the loan since the account was discharged.

Now, 4 years later, I received a call from some collection agency asking for the bikes. The problem is, about two years ago both bike became more problemsome than they were worth and were parted out. (Junk)

What is my obligation to the company? My understanding is that the worst case scinero is they place a lien on the bikes, which is no problem to me since they are probably in some scrap yard by now.

Anyone? Thanks!

[manglicmot]

The advice that you were no longer obligated to pay was correct, but I hope the advice giver, (whomever that was), also advised you that you would have to surrender the collateral if you did not make payments. It seems like the attorney filing your case, if you used an attorney, would have told you to keep your payments current in order to keep the bikes.

What is your obligation to the company? I'm not exactly sure since the debt was discharged, it seems that their only recourse is to take the collateral now. I don't know what happens if the borrower no longer has the collateral.

[CATCHMEIFYOUCAN]

Just my opinion, your secured creditor was officially discharged, they should have taken the collateral THAN. Looks like the account was sold to a third party collector, think they are just seeing what money they can get out of you! I declared BK 12 years ago and one of my accounts was American Express for a couple thousand, 4-5 years later had a collection letter trying to collect on the account (actually negotiate a small amount - 4 years later), I sent them a copy of my discharge papers, never heard from them again!
Often times your account will of been sold to those 3rd party collectors, they are scavengers looking to see if they can collect on old debts from those who don't know any better but get scared into paying them! Be careful!

CMIYC

[Duneuser]

After four years of discharge, Bass & Assoc. sent some repo people to the house to pick up the bikes. I told them we haven't had the bikes for a couple of years now and that the bikes were junked way back. If they really wanted them, they should have shown up at the hearing. It's been 5-6 months now since they showed up and I haven't heard another word.

Thought that was kind of strange?

[aachudneymiles]

Just my opinion, your secured creditor was officially discharged, they should have taken the collateral THAN. Looks like the account was sold to a third party collector, think they are just seeing what money they can get out of you! I declared BK 12 years ago and one of my accounts was American Express for a couple thousand, 4-5 years later had a collection letter trying to collect on the account (actually negotiate a small amount - 4 years later), I sent them a copy of my discharge papers, never heard from them again!
Often times your account will of been sold to those 3rd party collectors, they are scavengers looking to see if they can collect on old debts from those who don't know any better but get scared into paying them! Be careful!

CMIYC

i agree if they wanted the bikes they would have asked then .. not four years later.... now i would send them a copy of discharge and forget about them.plus they are not orig cerditor... they are not suppose to be contacting you anyways .. is was discharged 4 years ago..

[FreshLikeADaisy]

Duneuser, I'm pretty certain you can rest easy. When a Chapter 7 discharge is granted (and that debt was properly listed and discharged), if the creditor does not make arrangements to retrieve that property from you, it is considered an "abandonment" of their claim. This is true for obviously secured debts (cars, houses) as well as property purchased by unsecured debt (credit cards). The onus was on them to take action on their claim at the time you declared bk, either by repossession or objection. The advice you received from the original creditor at the time was legally correct: you were under no obligation to pay, and they had clearly abandoned their claim to the property. I think you are now dealing with a junk debt buyer, to be honest, not so much a collection agency (though it may technically be one) who would like you to believe that they have some legal right to collect from you.

If there are no liens involved and whoever bought this debt is just now figuring out, four years after the fact, that they COULD have repossessed those nice dirt bikes at the time, they're VERY likely out of luck and blowing air at you to see if you'll cough up either bikes or $$$.

If it were me, I would start by sending them a photocopy of the matrix (to prove the original creditor was notified) and the discharge itself, certified return receipt requested. I would make mention somewhere in there that the original creditor clearly abandoned the property, and that they are attempting to collect on a debt that has been legally discharged in bk.

I'm not an attorney, but everything I have seen suggests that post-bk, anything a creditor wants to do in regard to a legally discharged debt that they did not act on in a timely manner -- including repossessing security on debts, or objecting to the discharge of the debt -- is pretty much a lost cause.

[FreshLikeADaisy]

Duneuser, you should check out this thread:

http://www.bkforum.com/showthread.php?t=7162

Bass & Ass have been doing this for a long time. As I suspected, they cannot use a replevin action (that's legalese for repossession) as a means to collect on a legally discharged debt -- see the last post on the thread. Good luck!